Many people know about bankruptcy, but are unsure of the specific terms and definitions that go along with filing for bankruptcy. Well, we’re here to help clear the air. Here are some of the most commonly asked questions regarding bankruptcy, hopefully giving you a better understanding of the bankruptcy process:
What is Bankruptcy?
Bankruptcy is defined as a federal court legal proceeding that stops creditors from seeking uncollected debts. The debts are sorted out according to law, allowing you to find viable solutions to back payment issues.
How Can Filing For Bankruptcy Help Me?
Filing for chapter 7 or another form of bankruptcy is helpful in numerous ways. It essentially provides a clean slate by forgiving most or all debt, allowing you to start over financially. For example, if your house or mobile home is being foreclosed upon, you’ll be able to catch up on payments and retain your residence. It also prevents repossession of a motor vehicle; if the vehicle or other property has already been repossessed, the creditor will have to return it. Debt-collecting actions, such as wage garnishment, collection harassment and bank attachment will all cease, and utility services will be turned back on. Additionally, any incorrect creditor claims can also be sorted out.
What CAN’T Bankruptcy Do?
As helpful as filing for bankruptcy is, there are certain things it cannot help. Debts such as child or spousal support, student loans, some taxes and court restrictions/orders are generally not forgiven. It usually will not protect loan co-signers either, and such people must still pay some if not all of the loan. The rights of secured creditors may not be affected, such as those who take a mortgage or lien on a home/property as collateral for other large loans. Any debts sustained following bankruptcy filing will not be eliminated, either.
Keep in mind that bankruptcy appears on credit reports for up to 10 years. For answers to other common bankruptcy questions or to speak with a chapter 7 bankruptcy lawyer, please contact us today. After all, you have enough to worry about–let us handle all the paperwork.
Main photo by Chuck Hagel